What you need to know about your W-4 form (even if you aren’t starting a new job)

The W-4 form you fill out when you start a new job lets your employer know how much tax they should withhold from your paycheck. It is important to note that you should also fill out a new W-4 form any time you have changes in your financial or personal circumstances.

Filling out the form correctly is important because if you don’t withhold enough tax, you could end up owing a large sum to the IRS at the end of the year. On the other hand, if you overpay withholding you are temporarily giving money to the government that you could use for things like paying bills or investing.

The IRS issued a new W-4 for 2020. (Note: You do not need to fill out a new W-4 if your employer already has your old form on file.) The new form eliminated the ability to claim personal allowances (with the old … Read More

Retirement Risks to Consider

Planning for retirement is tough even in the best of times, and it has become even more challenging in the face of the Covid-19 pandemic. A recent study by Shwab Retirement Plan Services found that 41 percent of 401(k) survey participants have made changes to their 401(k) plans as a direct result of the coronavirus.

The survey’s results also showed that pre- and present retirees perceived retirement risks differ from their actual risks. Research economist Wenliang Hou of the Center for Retirement Research at Boston College analyzed five major sources of risk faced by a typical retiree:

  • Mortality or longevity (living longer than expected and running out of money)
  • Market (bad stock returns or a decline in housing values)
  • Health (unexpected medical expenses and long-term care costs)
  • Family (death of a spouse or unforeseen needs of family members)
  • Policy (such as a Social Security benefit reduction)

Hou’s empirical analysis found the … Read More

Get to Know your General Ledger

Familiarizing yourself with your company’s general ledger is particularly important in managing your cash flow during these precarious financial times.

According to Gene Marks, CPA and president and CEO of the Marks Group, “Everyone knows that successful managers are driven by data and that the devil’s always in the details.” That’s why he suggests printing and reviewing your company’s general ledger on a monthly basis.

The general ledger provides a record of every financial transaction. It holds all of the account information needed to prepare your company’s financial statements. Transaction data is segregated by type into accounts for assets, liabilities, owners’ equity, revenues, and expenses.

Some of the benefits of reviewing the general ledge include:

  • Better management of expenses. You will know exactly how much you are paying your vendors and what you are paying them for.
  • Ability to catch and correct errors. Reviewing payments made and expenses incurred may
… Read More